Determining Business Value of Geospatial Capabilities

Estimating the Business Value of Geospatial

Technology

David SonnenESRI Business Summit

June 28, 2004

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Objective• Describe a practical framework for identifying

and measuring the value of geospatial technology within enterprise information systems.

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Problem• Today, technology decisions and

program support are increasingly based on direct, measurable business value of technology.

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Problem• IT enables business processes rather

than producing direct business results.• ROI measures must accurately show

the effect of IT on business processes.

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Approach• Develop a framework that will:

– Identify and quantify geospatial technology’s direct contribution to performance metrics.

– Produce accurate and continuous ROI data as part of corporate management processes.

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Why Bother?• Align IT capabilities with corporate strategy• Understand strategic, operational, and

economic value of IT investments• Make good choices between technology

options• Improve efficiencies of business processes

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Fundamentals of Business Value

• Customers define value• Value is opaque• Value is multidimensional • Information technology is an enabler• Performance metrics reflect the tangible

value of information technology

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GVM Flow

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Step 0: Adapt GVM framework to Existing IT Design and Management Methods

• GVM must supplement existing design and management methods within the organization.

• GVM is easy to misuse if treated as stand-alone method.

• GVM is best implemented as an iterative and participative process.

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Step 1: Identify Business Process and People Involved

• E.g.: Activate telephone service

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Who’s Involved?

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Step 2: Process Diagram

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Step 3:Set Performance Metrics

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Performance Metrics

• Financial• Productivity• Customer Value

• E.g. Average time to activate account, customer churn rate, cost of activation process

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Step 4: Identify Geospatial Functionality/Data

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Step 5: Identify Additional Uses (optional)

Geocoding

Location determination

Routing

Spatial query

Desire line modeling

Thematic mapping

Geospatial Functionality

Operational/ Analytic Applications

XX X X XX X X

X

X X X X

X X X XX X X

X

X X X X

X X

Other Operations/ Production

Analytic Applications

X X X X

Demand Planning Analytics

Pricing Analytics

X

Procurement Analytics

Risk Management

Analytics

Inventory Tracking

Workforce Analytics

Materials Management And Logistics

Analytics

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Step 6 Determine Geospatial Specifications

• Data: Accuracy, resolution, immediacy, coverage, …

• Functions: Inputs, storage, edits, queries, topology, outputs, …

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Identify Geospatial Performance Contribution

Improve warehouse inventory throughput times by 80%

Produce on-demand inventory status for dispatch center

Decrease load/unload mistakes to 1 per 150 trailers dispatched

Generate 100% accurate State permits for all routes.

X

Geospatial Function

Integrate all location data

into transaction database

Incorporate location data into reporting and analysis applications

Determine asset location

Automate asset

location data entry

Track asset location

continuously

X X X X X

Generate pallet load orders in near real

time

Generate optimum

routes

XX X X

X X X

X

Performance Metric

X X

X

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Assess Alternatives

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Step 8: Design and Implement

• Use geospatial specifications as input to design– Data modeling– Data architecture– System specification and selection

• Use geospatial specifications in management parameters– Balanced Scorecard– Portfolio Management– Client’s corporate management process

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Step 9: Measure Performance

• Measure baseline performance.• Measure performance after new

information system is implemented on on-going basis.

• See “ROI Worksheet”.

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Step 10: Adjust/ Act

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Issues and Constraints• Metrics v. causation• Easy to overestimate value• GVM does not capture intangible value• Valuation methods often distorted by

political realities

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Conclusions• The business value of geospatial technology

can be identified and assessed.• Measurement requires that the role of

geospatial technology be considered throughout the design and implementation of business processes and the information systems that support them.

• Effective valuation has to be continuous with real feedback to decision makers

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Contact Information

• David Sonnen, 360-332-7546• dsonnen@ispatial.com

• GVM paper: Available through British Ordnance Survey, Cambridge Conference 2003 Proceedings

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